Welcome to the April 2022 edition of DRWakefield’s Monthly Origin Focus.
April kicked off with the return of the SCA conference, this year held in Boston. This was the first time since the start of the pandemic that DRWakefield had been able to attend the conference, and it certainly did not disappoint! The show was well attended, and people from all parts of the industry from across the globe were present making it a fantastic opportunity for us to reunite with many of our partners.
The war in Ukraine is ongoing, and our thoughts remain with those affected. The impact the conflict is having on the price and supply of gas and fertilizer is continuing to be felt throughout the supply chain.
At the start of April Sterling was looking fairly strong given its recent tumult, sitting at about 1 GBP to 1.31 USD. However, between 22 – 28 April, it plummeted, bottoming out at 1 GBP to 1.24 USD. In the last days of April it began to pick up slightly, ending the month at 1 GBP to 1.25 USD.
In this report, we will delve deeper into Peru, India and Guatemala.
Coffee Origin Focus
In Peru, April has been characterised by the rising prices of raw materials producers are facing. This has happened as a direct result of the rising price of fuel, these hikes have already caused a series of protests across the country. However, the price of the dollar this month has not been badly affected, despite the political problems that are being experienced, it has been fluctuating between the range of 3.70 to 3.80 soles per dollar.
According to the Chamber of Coffee and Cocoa of Peru, the first two months of 2022 export volumes set historic highs. This was due to the export of the coffee that was unable to ship last year. Because of the international container crisis, a huge volume of coffee was stuck in Peruvian ports at the end of last year. 2021 closed with a 31% drop in green coffee exports compared to 2011, the lowest in the last 10 years, according to the National Coffee Board. Some producers have reported a recovery in production during 2022, and others have reported a drop caused by the increase in fertilizer prices, which meant they were unable to apply the appropriate doses to their farms.
April is the beginning of the coffee harvest in many regions of the country, but the harvest is currently under threat from the constant rains that began in February, hindering the drying and potentially the quality of the coffee. The weather is still quite rainy in the coffee-growing regions but it is expected that throughout May it will be slightly drier and so hopefully will not cause further problems with the drying process. This year a smaller harvest in volume is expected than that of 2021, however, the quality is projected at a good level. The San Martín region, which is one of the first to start harvesting in Peru, is predicted to have a 20% less harvest compared to last year.
The main news impacting the coffee industry in India is the Ukraine war. After the initial shock and worries about supply chain disruptions, speculation is now rife about the opportunities linked to Rupee – Rouble trade in coffee. Particularly, there is hope for better prospects for Robusta, harking back to Soviet times when Russia provided a significant market for Indian Robusta.
After a prolonged lull on fuel price increases due to elections for a few key State Assemblies, Petrol and Diesel price increases are back. Inflationary trends continue to worry economy watchers. As in many other countries, the price of Potassium (fertiliser) has shot up by more than 40%, which will likely affect the bean growth of the next crop as many farmers won’t be able to afford the higher prices.
Uncertainty continues to surround the future of organic certifications in India. Several certification bodies have lost their accreditation with the Indian national regulator, while the organic certifying bodies in the EU and the US continue to raise concerns about the robustness of the organic authentication system in India. The huge volumes of paperwork and a host of lab tests and verification measures are a significant barrier for genuine organic growers and businesses in India, dissuading many from trying to get certified.
This year’s Robusta harvest seems to be almost on a par with the previous year’s production. However, the Arabica harvest appears to be about 20% down on last year. The demand for Arabica cherries and Robusta parchment remains strong both internationally and nationally.
Guatemala, like much of Central America, has been facing difficulties recently. With this year’s crop lower than expected and a lack of pickers due to people migrating and workers being able to make more money elsewhere, this past year has not been smooth sailing. Now, as with the rest of the world, Guatemala is also facing the impact of the Ukraine war. The price of gas and fertilizer has increased dramatically and shows no signs of coming back down in any significant way soon. This will no doubt mean that farmers won’t be able to afford the amount of fertilizer they need and so their coffee trees will likely produce smaller volumes of cherries during the next crop.
However, it is not all bad news! DRWakefield’s first trip to origin since the start of the pandemic was to Guatemala earlier this year. One of the farms that we visited was our long-time partner Nueva Granada. Last year at Nueva Granada they decided to take advantage of a quieter year and refurbished their farm. Whilst this means a smaller crop in the immediate future, it will no doubt pay off and they will be producing greater volumes than before further down the line. They have also been experimenting with different varietals and processes. For the first time, we have sourced a honey-processed Geisha and a Robusta from Nueva Granada. This Guatemalan Robusta has a softer profile than a classic Indian Robusta whilst still packing that Robusta punch! It is due to arrive in the UK this summer, so be sure not to miss out!
Our thanks to our partners Elements, Sol&Café and Frontera San Ignacio.